Biz Break: Gigamon is first victim of Silicon Valley earnings season tumult

Today: Gigamon plummets after revealing that earnings report will not live up to expectations. Also: PC shipments clock best quarter in two years.

The Lead: Gigamon reveals weak sales performance, stock plummets

Silicon Valley's earnings season has yet to truly begin, but the quarterly baring of financial information has already claimed its first victim on Wall Street, as Santa Clara networking company Gigamon shedded nearly a third of its valuation in a single day upon revealing a second consecutive disappointing quarter.

Gigamon announced before trading opened Wednesday morning that its sales in the second quarter did not live up to its projections, revealing that revenues will be around $35 million after the company's forecasts called for sales of $38 million to $42 million.

Specialists Vincent Surace, left, and Michael Urizzo, second left, and traders Gregory Rowe, third left, and Peter Costa work on the floor of the New York Stock Exchange, Wednesday, July 9, 2014. Stocks inched higher in early trading Wednesday, reversing a two-day decline, as the quarterly earnings season got underway with some positive news from the giant aluminum company Alcoa. (AP Photo/Richard Drew)
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If the news sounds familiar, that's because Gigamon also pre-announced weak results in the previous quarter ahead of its actual report, and the repeat performance seemed to agitate investors and analysts even more the second time around. Gigamon's stock immediately plunged upon the session's opening, eventually dropping 32.4 percent to $12.29 as analysts rushed to downgrade the company in acerbic notes that questioned management's ability to accurately predict performance.

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"The magnitude of the second consecutive top-line miss brings management's statements and credibility into question and suggests that competition from newcomers such as Arista and/or overall curtailed market growth may have also been a factor in the company's underperformance," William Blair analyst Jason Ader wrote in a note.

"With the second pre-release in a row, we believe the idea that the 1Q miss was isolated becomes untenable," said Needham analyst Alex Henderson, who changed his rating on Gigamon from "Strong Buy" to "Buy" and slashed his price target from $34 to $20. "With no explanation offered for the second miss, we must assume there is a structural issue that is likely to take 2-4 quarters to fix."

Earnings season officially kicked off with Alcoa's report on Tuesday, but no major Silicon Valley tech firms will reveal their full reports until next week, when Intel, Yahoo and SanDisk are scheduled to release results.